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NEW YORK - The Federal Reserve Bank of New York today hosted
a third meeting of major derivatives market participants and
their domestic and international regulators to review progress
in strengthening the infrastructure that supports the credit
derivatives market and to discuss additional initiatives in
the equity derivatives market.

The New York Fed welcomes the progress achieved over the
past twelve months. Since September 2005, the major firms have:

ended the market practice of assigning trades without
obtaining prior consent of the counterparties,

reduced the number of all confirmations outstanding by
70 percent and confirmations outstanding for more than 30
days by 85 percent,

doubled the share of trades that are confirmed on an electronic
platform to 80 percent of total trade volume, and

agreed upon a protocol for the settlement of a credit
event.

Going forward, it is important that market participants sustain
their progress toward a more automated post-trade processing
environment where the vast majority of trades now are processed
electronically and where there are strong risk mitigants for
more complex trades. We also believe it is important to see
the participants’ robust adoption of the newly created trade
information warehouse.

Finally, we look forward to seeing the industry improve the
automation and standardization of over-the-counter equity
derivatives trading and reduce the current levels of unconfirmed
trades.

We will continue to work closely with other U.S. and international
industry supervisors to monitor the credit derivatives markets
and the work that is planned in equity derivatives.